Incentives Watch: Pennsylvania Attempts to Lure Shell Plant with Attractive Tax Incentives

There has been a lot of competition between states located in the Marcellus shale area to attract companies by offering tax credits that will allow them to profit from the shale gas. 

In Pennsylvania, for example, a resource manufacturing tax credit was recently enacted to encourage Shell Chemical LP to build a petrochemical plant in the state in order to take advantage of the Marcellus shale gas there. 

The credit is equal to 5 cents per gallon of ethane purchased and used to manufacture ethylene in Pennsylvania and will be available starting Jan. 1, 2017. The company must invest at least $1 billion and create at least 2,500 jobs in order to be eligible for the credit, according to the Bloomberg BNA’s Weekly State Tax Reportarticle.

The plant would be located in a designated, tax-free Keystone Opportunity Zone and Shell Chemical would have the ability to transfer the credit, according to an article in the Times Observer. 

Proponents of the deal believe that Shell Chemical will be able to transfer those credits to other chemical manufacturing businesses, which will lead to the industry being built up more in the state. Opponents feel that it is a ‘taxpayer handout’ to the company, according to the Times Observer article. In addition, those against the plan believe it is unfair to other businesses in the area and is a bad tax policy, according to an article in Yahoo! Finance.

In addition to Pennsylvania, West Virginia enacted a property tax credit for businesses that spend at least $2 billion constructing an ethane cracker plant in the state, according to a Bloomberg BNA Weekly State Tax Reportarticle.

With other states vying for Shell Chemical to locate its plant there as well, only time will tell if Pennsylvania’s resource manufacturing tax credit will be enough of an incentive to lure Shell Chemical to the state.

In other developments . . .

North Carolina enacted a bill extending a number of income tax credits and refunds, according to a recent Bloomberg BNA Weekly State Tax Reportarticle. The work opportunity credit is extended to 2014. In addition, the credits for rehabilitating mills and historic structures are extended to Jan. 1, 2015.

By: Kathleen Caggiano

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